By Cliff Watson, Tax Director Grant Thornton Johannesburg Usually, farmers are registered to pay VAT on a six-monthly cycle. This means that these farmers have to finance the VAT that they incur on their operating and capital costs for long periods before they get a refund from SARS. The VAT Act currently provides that some farmers may acquire certain goods that are used or consumed for agricultural, pastoral or other farming purposes at the zero-rate. This rule was implemented mainly to assist these farmers with their cash flow before they earn income from their produce.
Category: VAT
An update on the streamlining of the VAT registration process
The Taxation Laws Amendment Act, No. 31 of 2013 (TLAA) introduced legislative amendments aimed at streamlining the Value-Added Tax (VAT) registration process as contained in the Value-Added Tax Act, No. 89 of 1991 (VAT Act). In the 2013 Budget, the Minister of Finance, Pravin Gordhan (Minister) indicated that there would be efforts to reorganise the VAT registration process to ease the burden of complying with the requirements for registration. This culminated in amendments being made to s23(3)(b)(ii) and s23(3)(d) of the VAT Act, respectively.
Online foreign gaming providers required to register for VAT under new legislation – even if they are not registered under the National Gambling Act
New legislation requiring foreign suppliers of electronic services to register for Value Added Tax (VAT) in South Africa may prove to be challenging for those providing online gaming services – especially as the supply of these services is not yet fully included in South Africa, says PwC. “Recent changes to the VAT legislation place a VAT registration obligation on these suppliers, irrespective of whether they are registered under the National Gambling Act of 2004,” says Gerard Soverall, PwC Head of Indirect Tax for Gauteng. The new legislation requiring foreign suppliers of electronic services to register for VAT in South Africa as soon as the total value of such supplies reaches R50 000 (about USD 4 500) came into effect from 1 June 2014.
VAT – Importation of goods
The requirements for claiming VAT when importing goods to South Africa have always been contentious and the affected VAT vendors are often unsure about the documentary evidence they need to retain to survive a SARS VAT audit. Even SARS offices interpret or enforce the provisions of the VAT Act differently. For example, some allow the clearing agent’s invoice as proof of import and others accept payment to the clearing agent as proof that VAT has been paid. Even the timing for claiming the input tax deduction has been disputed. These uncertainties have resulted in many VAT vendors receiving significant assessments, penalties and interest charges from SARS.
Rectification of an agreement in order to secure zero-rated VAT
The issue before the court in Milner Street Properties (Pty) Ltd v Eckstein Properties (Pty) Ltd [2001] ZASCA 95 was whether an agreement that was intended by the parties to be a zero-rated VAT disposal from one VAT vendor to another of an enterprise as a going concern but which failed to satisfy the formal requirements imposed by section 11(1)(e) of the Value-Added Tax Act 89 of 1991 could be rectified, with retrospective effect, so as to satisfy those requirements.
Value-Added Tax and the disposal of a partnership interest to the remaining partner
Author: Andrew Lewis (DLA Cliffe Dekker Hofmeyr) It appears that there is often uncertainty whether the transfer of an interest in a partnership from one partner to another (ie either a new or existing partner) should be subject to value-added tax (VAT).
VAT considerations between developers and owners of land
Author: Carmen Moss-Holdstock (DLACliffeDekkerHofmeyr) Where a registered vendor for Value-added Tax (VAT) purposes disposes of vacant subdivided land or developed properties in the course and furtherance of conducting an enterprise as a property developer, such disposal would ordinarily constitute a taxable supply subject to VAT at the standard rate of 14%. Such property developer would further be entitled to a deduction of input tax incurred on the acquisition of goods and services in the course of making the taxable supplies.
Value Added Tax – Address on tax invoices
This ruling now clarifies that the address of the recipient and supplier to be reflected on a tax invoice, debit or credit note is either The physical address from where the enterprise is being conducted; The postal address of the enterprise; or Both the physical and postal addresses of the enterprise. With regard to branches or divisions that are separately registered for VAT in terms of section 50(1) of the VAT Act, the tax invoice, credit or debit note must reflect the address of the branch or division as listed above.
VAT Treatment of loyalty programmes
By Carin Grobbelaar and Janine Swanepoel, Grant Thornton Cape Loyalty programmes are gaining more popularity as companies aim to make their products and services more attractive than their competitors’ offers. These programmes are widely used as incentive schemes to encourage spending and build loyalty by rewarding customers with discounts, vouchers and other benefits.
Single registration: will it reorganise the disorganised?
Author: Beric Croome and Nada Kakaza (ENSAfrica) The South African Revenue Service (“SARS”) introduced a new streamlined process primarily geared towards the single registration of a taxpayer across applicable tax types. This system was implemented on 12 May 2014.